Three-strikes plan shifts financial burden to rightsholders

UK users put on "Copyright Infringement List" if they get 3 letters in 12 months.

UK telecom regulator Ofcom detailed the code that ISPs and copyright holders must abide by when enforcing the contentious Digital Economy Act—a law where prolific pirates can face legal action after three warnings.

The act allows copyright owners to send infringement reports to broadband providers BT, Everything Everywhere, O2, Sky, TalkTalk, and Virgin Media. In turn, those ISPs will send letters to their customers whose accounts are connected to the report.

If a customer receives three or more letters in a 12-month period, they'll be put on a "Copyright Infringement List." The list is an anonymized document that enables copyright owners to see which of the reports they have made relate to subscribers who have received multiple notifications.

In the copyright holder wishes to do so, it can then get a court order to strongarm the ISP into revealing the identity of those customers. Then, legal action can take place. It's designed to put legal pressure on the most prolific infringers.

Ofcom says that the letter must also include tips on securing a wireless network to prevent others from downloading pirated content over the customer's connection. Plus, ISPs should offer suggestions on websites and services that offer legal and licensed content.

The letter will also include the number of copyright infringement reports connected to the customer's account. Customers can appeal the decisions—it costs £20 ($31.22), but you'll get that cash back if your appeal is successful. Ofcom will appoint an independent appeals body for this task.

The regulator has also detailed who will pay for the policing, appeals, and letters. Essentially, rightsholders will pay the most—they'll bear all the costs incurred by Ofcom, the majority of the costs from the appeals body, and 75 percent of the money spent by the ISP.

Rightsholders will get a discount for reporting in bulk, though. If a copyright holder sends 70,000 reports a month they'll pay £17 ($26.50) for each report. If they send 175,000, the reports will only cost £7.20 ($11.24) each.

Ofcom will now open a month-long consultation period, which closes on July 26, 2012. Subject to further review by the European Commission, the revised code will then be laid in Parliament around the end of 2012

Ofcom currently expects the first customer notification letters to be sent in early 2014.

45 Reader Comments

Rightsholders will get a discount for reporting in bulk, though. If a copyright holder sends 70,000 reports a month they'll pay £17 ($26.50) for each report. If they send 175,000, the reports will only cost £7.20 ($11.24) each.

Hold on, so the publishers are going to spend $10-$25 to "report" each instance of infringement they find? In what universe is that a profitable way to operate? It boggles my mind that these companies haven't realized the most effective way to deal with piracy is to ignore it and to be more convenient.

Meanwhile, in France, the new SACEM (collection agency) director latest proposal to reform HADOPI, the benchmark of 3-strikes schemes, would drop the three strikes entirely, going straight to sanctions, in exchange for lower sanctions (no disconnections, no prison, mostly fines) and would remove the financial burden from the rightsholders (where it's supposed to land, whether on the taxpayers or the ISPs, and therefore users, is still unclear).

Rightsholders will get a discount for reporting in bulk, though. If a copyright holder sends 70,000 reports a month they'll pay £17 ($26.50) for each report. If they send 175,000, the reports will only cost £7.20 ($11.24) each.

Hold on, so the publishers are going to spend $10-$25 to "report" each instance of infringement they find? In what universe is that a profitable way to operate? It boggles my mind that these companies haven't realized the most effective way to deal with piracy is to ignore it and to be more convenient.

I think that's kind of the point that the telecom operator is trying to get across, here. They're being forced to implement a three strikes law that they didn't necessarily want, and as a result they're passing the costs of that on to the publishers. Otherwise, there's no disincentive to the publishers to spam the ISP with possibly fraudulent piracy reports -- similarly to what happens with DMCA takedowns now, where there isn't even a good faith effort to determine that the file in question is infringing; they just work on whether or not the names share some common characteristics.

It seems like a decent way to make sure that the Publishers actually think about what they're doing before they send an infringement report.

Maybe they figure that spending $30 per non-paying "customer" (to get to three strikes) will somehow make these "customers" pay for their content? This is absurd though, because $30 per customer can go a long way toward producing better shows, or lowering prices. But you know, they're willing to chase customers at any cost, even if those customers probably won't pay anyway. I suppose they figure that making a customer pay for their content at all times is better than the free publicity created when people don't always pay for their content.

takes $2-2.5m to notify 100,000 ISP subscribers one time. A lot of them will likely violate again (possibly not even having received the first communication by the time a new month of reports rolls though the ISP). Lets say to be safe, half the first pool, so (assuming they're sending other letters to other new first-time-this-year subscribers to still get the discount), another 1m or so? Then some few (1-5%?) might not stop and will get a 3rd letter, that round is comparitively cheap, but there's some cost in demanding their ID's too, so lets round the whole thing off to $3.25m in order to identify 100-500 people to prosecute.

Assuming even 10% don't turn out to be under 18, can;t point the finger at a houseguest, or had open WiFi that could be pointed to anyone, granting immediate dismissal on challenge, we're talking hundreds of dollars more, each, in legal challenges befoer we can even get 10-50 people into a courtroom. Now we're pushing $3.5m in total legal costs. If they have a courtroom success rate of even 75% (unusually high success rate), we're talking somewhere above $90,000 being the minimum fine levied AND COLLECTED in order for them to break even...

This didn;t prevent any crimes, this didn;t stop downloading, this was just a massive, liklely multi-year effort, at an extreme outlay of resources, to break even. Now, how many people do you know that might actualy HAVE $90,000 in assets that could be taken and sold with which to pay that debt? And of those people, how many are hard-core pirates vs people that have money and simply would buy most content legally anyway.

I think these laws are WELL and sufficint a stopgap to prevent this system from being abused. By placing the costs on the suer (where they should be) and providing a simple refund guaranteed (and cheap) challenge system, most people are simply going to pay up and challenge, and the real hardcore pirates won't ever be found guilty as they'll be smart enough to leave a WiFi open as an excuse, or use a VM with a virtual MAC address that can't be traced to a real device. So, instead, the worst offenders will get sent letters, few will ever be prosecuted, and the ISPs won;t really feel much burden.

Instead, they could simply start watermarking instead of encrypting files, and poison the filesharing pools with marked files, and stir distrust in the illegal file sharing circles, but no, that would be too convenient....

I like this. I actually think this is exactly how 3 strike policy notification systems should work. The only thing that would make it better is if the rights holders were fined every time an appeal was lost because the failed to do due diligence.

Honestly, every study shows that the impact on an industries profit from piracy is relatively low. Yet rightsholders want the ability to inflict serious economic harm on others to enforce their monopoly on a good. I think they should bear the cost of that enforcement. They should have to weigh the potential costs of their actions against the likely return, and make a value judgement JUST LIKE EVERYONE ELSE.

If they can make complaints for free, and there's no penalty for being wrong, they'll file a notice for ANYTHING that might infringe, even if it's just bird songs, as has been demonstrated here in the US.

No free rides. If big content wants to force people to give up the rights to the product they made just so it can be distributed, and if piracy is such a massive threat to their business model that they can't figure out how to harness the popularity of a product and instead have to sue everyone who likes it... Well they should bear the costs instead of passing them on to completely unrelated markets.

I would be perfectly happy if companies could start charging for handling DCMA requests, and if the DOJ could charge a company for wasting it's time for every complaint that is filed that was proven not to be accurate. Hell I'd just be happy if they started slamming people who make bad DCMA requests with the perjury charges they SHOULD be facing. That might reign in some of this idiocy.

BTW. I say this as someone who makes his living creating content. It bothers me when I don't get paid for something I created, but I don't think the ill will I'd generate by pursuing individuals is worth it. Especially since the biggest pirates of my stuff so far has been the big companies who tell me they own the rights to my work. I've recieved CnD letters for publishing content I made on my own site from more than one of the Big 6 publishers, even though its all original work that I never signed any contract with them for, and they clearly don't own the rights to any of it. Seriously.

"Ofcom says that the letter must also include tips on securing a wireless network to prevent others from downloading pirated content over the customer's connection. Plus, ISPs should offer suggestions on websites and services that offer legal and licensed content."

I've never quite understood why it seems that a private home owner has more liability for his guests actions than say an internet cafe or a public library? Why can't I say: "Go ahead and use the internet but what you do is on you".

"Instead, they could simply start watermarking instead of encrypting files, and poison the filesharing pools with marked files, and stir distrust in the illegal file sharing circles, but no, that would be too convenient...."

And you know as well as I do that watermarking and such will not work because the CIRCLES are just too organized and too large to be intimidated by such puny efforts. That is child stuff. Anyway these rightsholders, as they are called, are not known to be internet savvy, and neither are the governments that have been mentioned. No offense to the rightsholders.

I like this. I actually think this is exactly how 3 strike policy notification systems should work. The only thing that would make it better is if the rights holders were fined every time an appeal was lost because the failed to do due diligence.

Honestly, every study shows that the impact on an industries profit from piracy is relatively low. Yet rightsholders want the ability to inflict serious economic harm on others to enforce their monopoly on a good. I think they should bear the cost of that enforcement. They should have to weigh the potential costs of their actions against the likely return, and make a value judgement JUST LIKE EVERYONE ELSE.

If they can make complaints for free, and there's no penalty for being wrong, they'll file a notice for ANYTHING that might infringe, even if it's just bird songs, as has been demonstrated here in the US.

No free rides. If big content wants to force people to give up the rights to the product they made just so it can be distributed, and if piracy is such a massive threat to their business model that they can't figure out how to harness the popularity of a product and instead have to sue everyone who likes it... Well they should bear the costs instead of passing them on to completely unrelated markets.

I would be perfectly happy if companies could start charging for handling DCMA requests, and if the DOJ could charge a company for wasting it's time for every complaint that is filed that was proven not to be accurate. Hell I'd just be happy if they started slamming people who make bad DCMA requests with the perjury charges they SHOULD be facing. That might reign in some of this idiocy.

BTW. I say this as someone who makes his living creating content. It bothers me when I don't get paid for something I created, but I don't think the ill will I'd generate by pursuing individuals is worth it. Especially since the biggest pirates of my stuff so far has been the big companies who tell me they own the rights to my work. I've recieved CnD letters for publishing content I made on my own site from more than one of the Big 6 publishers, even though its all original work that I never signed any contract with them for, and they clearly don't own the rights to any of it. Seriously.

"Ofcom says that the letter must also include tips on securing a wireless network to prevent others from downloading pirated content over the customer's connection. Plus, ISPs should offer suggestions on websites and services that offer legal and licensed content."

I've never quite understood why it seems that a private home owner has more liability for his guests actions than say an internet cafe or a public library? Why can't I say: "Go ahead and use the internet but what you do is on you".

Because it's the internet. It's new. There isn't a lot of case law on it [like regular mail for example]. The govt could get xray scanners to see the contents of your mail without opening it, but that would be illegal. But because email isn't in a wrapper sent through the US Postal Service, even with a clearly marked sender and receiver [which can be trivially forged, just like regular mail], the govt feels it can read all of it.

"Ofcom says that the letter must also include tips on securing a wireless network to prevent others from downloading pirated content over the customer's connection. Plus, ISPs should offer suggestions on websites and services that offer legal and licensed content."

I've never quite understood why it seems that a private home owner has more liability for his guests actions than say an internet cafe or a public library? Why can't I say: "Go ahead and use the internet but what you do is on you".

In my experience, using the wireless internet at a cafe or hotel requires you to go through a gateway and agree to ToS. In hotels, they usually ask for a room number also, and I assume they track traffic by MAC address so they can forward any complaints that are made to their IP address by cross-referencing the person in that room at the time the complaint was made. Not sure how coffeeshops do the verification since I haven't connected to many of those in my day. Maybe they just throttle the bandwidth to the point that anything other than web surfing is essentially futile, and the person who is there for 5 straight days is likely the one who downloaded the Tangled blu-ray rip.

Edit: I meant to bring my point around, which was that you can probably do what you are asking if you implement a gateway that folks have to register on in order to access your network. Not sure the cost of doing something like that, though.

I am Censoring all Big Content from my wallet !!! They will never get a dime out of me for the rest of my life.I no longer care about the newest cool TV Show or Movie.....................does not matter.I will support the Indie type Industry, DIY Art, and my State's local scene.Bye Bye Big Content !!!

It sounds cool, as long as, rights holders loose all enforcement privileges after three successful appeals in one year. I also think the customer should be given three times legal cost as well as a mondo big penalty.

Edited to say: Rights holders should pay customers three times the customers legal fees and a big wad of cash for the hassle, if the customer wins the appeal.

I am Censoring all Big Content from my wallet !!! They will never get a dime out of me for the rest of my life.I no longer care about the newest cool TV Show or Movie.....................does not matter.I will support the Indie type Industry, DIY Art, and my State's local scene.Bye Bye Big Content !!!

That's great. Doesn't work for most people. Kids, sorry, you're not going to see the newest Disney movie because of something you won't understand, but trust me, it's for your own good.

"Ofcom says that the letter must also include tips on securing a wireless network to prevent others from downloading pirated content over the customer's connection. Plus, ISPs should offer suggestions on websites and services that offer legal and licensed content."

I've never quite understood why it seems that a private home owner has more liability for his guests actions than say an internet cafe or a public library? Why can't I say: "Go ahead and use the internet but what you do is on you".

In my experience, using the wireless internet at a cafe or hotel requires you to go through a gateway and agree to ToS. In hotels, they usually ask for a room number also, and I assume they track traffic by MAC address so they can forward any complaints that are made to their IP address by cross-referencing the person in that room at the time the complaint was made. Not sure how coffeeshops do the verification since I haven't connected to many of those in my day. Maybe they just throttle the bandwidth to the point that anything other than web surfing is essentially futile, and the person who is there for 5 straight days is likely the one who downloaded the Tangled blu-ray rip.

The next step will, of course, be to shut down those portals of piracy at coffee shops and hotels.

I am Censoring all Big Content from my wallet !!! They will never get a dime out of me for the rest of my life.I no longer care about the newest cool TV Show or Movie.....................does not matter.I will support the Indie type Industry, DIY Art, and my State's local scene.Bye Bye Big Content !!!

That's great. Doesn't work for most people. Kids, sorry, you're not going to see the newest Disney movie because of something you won't understand, but trust me, it's for your own good.

I know I watch half as many movies and only listen to unsigned bands. Every time I do see an MPAA movie, I feel guilty. You don't need to stop purchasing their content to hurt them, just cut back.

I'm sure the only way it financially makes sense is if you compare the absurdly over inflated figures they have from 'losses' against what these reports will cost.

Either that, or the government has purposefully made it so expensive for the 'rights holders' they're unlikely to use it much in which case I guess it's a job well done

Well, considering each pirate costs the industry hundreds of thousands of dollars each infringement, charging around $20 dollars to file each report is perfectly reasonable. Kudos to the government for their excellent understanding of copyright math.

So, if I submit 174,999 reports, it costs me £2,974,983; but, if I add one more, it costs me £1,225,000? The enforcement people at the rightsholder are going to be under serious pressure to find that 175,000th infringer.

The pricing should be more complex, so that the price per report drops off as the number of reports increases, but the total price always increases.

Uhh... Isn't volume discount designed to encourage people to use/buy something more than they normally would?

So, why wouldn't the rights holders use the shotgun approach where they send strike notices to anyone and everyone. The more they send, the cheaper they get! Damn it Britain, this is not a product you are trying to sell so stop using marketing tricks...

Wait a sec...

So how much profit does government/telecom gets with each letter sent?

---------------------------What I think should be the rule is

1. After a successful appeal, not only you get your £17 back, the original accusing rights holder needs to give the wrongfully accused £17 as compensation. Right not as it stand rights holder have no liability at all if they are wrong

2. Instead of volume discount, the cost of issuing the letter should go UP. This is to discourage rights holders from using shotgun approach to letter sending and to encourage them to be more accurate with each accusation.

I know hell will freeze over before those 2 suggestions get implemented...

An article on Wired on a performer who totally does not need this type of law. He got rich without it.

Yes, this works if:

1) you are already famous. As in, when you do something, either good or bad, it makes the newspapers across the country, even if it's not on the first page2) there is no 2.

A random performer with exactly the same material as this guy, never gets the tv show, and if he did, never gets control of the content [either the rights to it or editorial control], and if he did have the cash to pay for it to be produced, when he put out the press release about the offer on his web site, he makes $20 from his mom, his girlfriend, and some random guy who happened across his site from googling something else.

It's a big waste of money for the rights holders, but I like this idea. Stops hurting consumers and puts a good stop to the massive waste of court time that is the DMCA in this country. No more wasting taxpayer money.

Instead, they could simply start watermarking instead of encrypting files, and poison the filesharing pools with marked files, and stir distrust in the illegal file sharing circles, but no, that would be too convenient....

You mean ineffectual.

The internet, and most of the people who compose it, largely assume a lack of intelligence on the part of everyone else. Since there's little difference between the egregious inept and the ineptly malicious, the whole system is just designed with so many checks and balances that no one person or one group can stop the system entirely.

A random performer with exactly the same material as this guy, never gets the tv show, and if he did, never gets control of the content [either the rights to it or editorial control], and if he did have the cash to pay for it to be produced, when he put out the press release about the offer on his web site, he makes $20 from his mom, his girlfriend, and some random guy who happened across his site from googling something else.

So? There are millions of would-be stars showing up at the doorstep of record companies and they never get anywhere. Why do you insist that the web ABSOLUTELY MUST BE DIFFERENT? Well, you know what? IT IS! You have a better chance of making money on the web thru self-promotion then you do getting in the door of a record company. The web is cheaper, faster, and a better career path than any other.

An article on Wired on a performer who totally does not need this type of law. He got rich without it.

Yes, this works if:

1) you are already famous. As in, when you do something, either good or bad, it makes the newspapers across the country, even if it's not on the first page2) there is no 2.

A random performer with exactly the same material as this guy, never gets the tv show, and if he did, never gets control of the content [either the rights to it or editorial control], and if he did have the cash to pay for it to be produced, when he put out the press release about the offer on his web site, he makes $20 from his mom, his girlfriend, and some random guy who happened across his site from googling something else.

This. That's the thing about Louis C.K, he's been doing this for 25 years. Comedy hasn't been mass produced like music has, you don't hire a backing band, hire some profitable writers then get whatever 19 year old with a decent voice then advertise the crap out of them in comedy, you work in clubs for a few years and if you're good, you move up from there. There are some bad comedians out there, but generally a lot of the very talented ones rise to the top. Most of the really popular musicians simply wouldn't be popular at all if it wasn't for the current music industry. Just think (and not too hard, I don't want to send anyone to hospital) about Nikki Minaj with creative control.

There's also that there are piles and piles of decent musicians already doing this, it's not exactly ground breaking. Some make a decent amount of money out of it too, however the model doesn't work for everyone. Just try organizing a world tour when you don't speak the local language.

If this law is ANYTHING like the one in NZ, the rightsholder will immediately turn araound and start lobbying to have the price lowered. Of course, this will be mere amendement to existing policy so any price change to the rights holder won't go through extensive review nor public consultation.

I like it - make the media companies bear the cost of harassing internet users with their copyright threats! Too bad the MPAA et al have bought too much influence with the politicians in the US - the people pay the cost of "protecting" copyright in the US while the corporations reap all the gains.

Instead, they could simply start watermarking instead of encrypting files, and poison the filesharing pools with marked files, and stir distrust in the illegal file sharing circles, but no, that would be too convenient....

You mean ineffectual.

The internet, and most of the people who compose it, largely assume a lack of intelligence on the part of everyone else. Since there's little difference between the egregious inept and the ineptly malicious, the whole system is just designed with so many checks and balances that no one person or one group can stop the system entirely.

Yeah, zelannii misses that they tried that and people simply moved away from the watermarked stuff to stuff that didn't have the watermark.

This didn;t prevent any crimes, this didn;t stop downloading, this was just a massive, liklely multi-year effort, at an extreme outlay of resources, to break even. Now, how many people do you know that might actualy HAVE $90,000 in assets that could be taken and sold with which to pay that debt?

And of those people, how many are hard-core pirates vs people that have money and simply would buy most content legally anyway.

Very very good point. The people who steal typically aren't the people who buy....

zelannii wrote:

I think these laws are WELL and sufficint a stopgap to prevent this system from being abused. By placing the costs on the suer (where they should be) and providing a simple refund guaranteed (and cheap) challenge system, most people are simply going to pay up and challenge

The burden of proof ( and cost) should be on the person that alleges harm, not solely on the person that is alleged to have caused that harm.

zelannii wrote:

and the real hardcore pirates won't ever be found guilty as they'll be smart enough to leave a WiFi open as an excuse, or use a VM with a virtual MAC address that can't be traced to a real device.

I'm curious as to how many people have successfully argued the "it wasn't me, it was someone else" argument. I mean, ignorance of the law is not a defense. It would seem to me that failing to secure your WiFi network constitutes negligence at best. The only way to use the "open Wifi" defense is to forensically prove that you (1) took reasonable steps to secure your network or (2) prove that someone circumvented those measures. For example, if you used WEP instead of WPA-PSK ( TKIP+AES) and someone cracked your Wifi, then, by all means, its not your fault ( conceivably ). But in the general sense, ignorance with respect to securing your network is a poor excuse and lacks legal merit.

I am Censoring all Big Content from my wallet !!! They will never get a dime out of me for the rest of my life.I no longer care about the newest cool TV Show or Movie.....................does not matter.I will support the Indie type Industry, DIY Art, and my State's local scene.Bye Bye Big Content !!!

That's great. Doesn't work for most people. Kids, sorry, you're not going to see the newest Disney movie because of something you won't understand, but trust me, it's for your own good.

Guy with High Expectation Asian Parents here. I grew up missing a lot of TV, let alone movies. Sure, not being able to join the discussions on the latest cool McGuyver or Knight Rider episode hurt, but it passed.

Kids now have WAY more options than just stupid Big Content crap. Hell, get them interested in gaming, and critical thinking on what goes INTO the games. You could pull a lot from that, from math to science and art. Fuck TV, fuck movies, fuck Big Content.